Fears spread

No one seems to be able to calm the world markets, and the train wreck continued in Asia last night. It seems there is not much more the Fed can do, so one hopes the the medicine starts to work soon. Some headlines from the Web this morning.


Nikkei dives 9.4 percent From Reuters

"The deteriorating outlook for the economy and the deepening financial crisis are pushing fear to its limit," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

"Investors want to dump shares as their willingness to take risks has shrunk, but no one wants to buy even if stocks are valued cheaply."

The yen climbed to a six-month high against the tumbling U.S. dollar, as investors stampeded away from stocks and risky positions.

Central banks cut rates to contain crisis From Reuters

The Fed said it was cutting its key federal funds rate by 50 basis points to 1.5 percent. China, the European Central Bank (ECB) and central banks in Britain, Canada, Sweden and Switzerland also cut rates in the coordinated response which analysts had been demanding.

Fed announces plan to buy corporate debt From WLNS

The Federal Reserve announced plans to buy up some coporate paper, that's debt, by creating a commercial paper funding facility.

What does that translate too? Look it this way, The fed would normally do this with corporate paper and debt that is collateralized. Meaning, secured, like your house or car. Well, not anymore. Now, the fed will try to increase liquidity in the funding markets by offering a back-stop to debt that is unsecured and they will do it by collecting up front fee's for the service

Funds flight from corporate paper forced Fed move From Bloomberg

The Federal Reserve's decision today to buy U.S. commercial paper came after money market mutual funds fled the market, cutting off a vital source of short-term corporate financing and pushing the economy toward a recession.

Money-market funds, the biggest buyers of commercial paper, reduced holdings of the highest-rated debt by $200.3 billion, or 29 percent, in the final two weeks of September, according to data compiled by IMoneyNet Inc. of Westborough, Massachusetts. Managers unloaded the debt to meet a surge in investor redemptions and to shift assets to Treasuries, which can be sold more quickly if withdrawals persist.